Bank of America strategist Anthony Cassamassino argues that the broader market environment continues to favor equities, with supporting forces behind the current rally remaining largely intact.
Cassamassino pointed to strengthening earnings momentum as a key pillar of his bullish outlook, noting that the Global Earnings Revision Ratio has improved to a six-month high.
“BofA’s RIC Outlook points to a largely bullish backdrop for the U.S. economy and global equities, with indicators confirming the ‘new industrial cycle’ remains intact and earnings momentum strengthening,” Cassamassino said.
He added that while valuations and positioning suggest markets may be somewhat overheated near term, “any summer pullback could be a potential buying opportunity.”
Against that backdrop, BofA has identified three stocks as standout picks for the third quarter, spanning media and entertainment, retail, and automotive sectors.
Spotify Technology (NASDAQ: SPOT) tops the list, with BofA analyst Jessica Reif Ehrlich describing it as the firm’s top pick in Media and Entertainment heading into the quarter.
Spotify reported 761 million total monthly active users in the first quarter of 2026, a 12% year-over-year increase, while quarterly revenue exceeded 4.5 billion Euros, beating forecasts by 10 million Euros.
Reif Ehrlich highlighted a strategic shift at the company, stating that “SPOT’s investor day marked a clear strategic shift from mainly scaling users to monetizing engagement through segmentation, pricing and higher-value experiences.”
She sees particular strength in Spotify’s pricing power, new subscription tiers including a recently announced AI-driven music remix tier, audiobook expansion, and continued advertising growth in the second half of the year.
Reif Ehrlich carries a Buy rating on SPOT with a $685 price target, implying approximately 43% upside from the stock’s current trading price of $479.77.
Wall Street broadly agrees, with SPOT holding a Strong Buy consensus based on 24 analyst reviews comprising 19 Buys and 5 Holds, and an average price target of $607.22.
Walmart (NYSE: WMT) is BofA’s second pick, with analyst Christopher Nardone maintaining a bullish view despite a market reaction that was cooler than expected following the company’s most recent earnings report.
Walmart reported fiscal first-quarter revenue of $177.75 billion, up 7.3% year-over-year and $2.91 billion ahead of estimates, while eCommerce sales rose 26% globally in the period.
Nardone believes Walmart’s competitive positioning remains formidable, citing its ability to fund pricing investments through high-margin businesses like advertising and membership as a structural advantage.
“We remain convinced that the current backdrop consisting of strength from the upper income consumer and some caution from the value-seeking consumer is conducive for Walmart to accelerate share gains by leading with price and speed,” Nardone stated.
He also pointed to best-in-class delivery speeds and the potential for further upside if lower-income consumers hold up better than expected, particularly as gas prices ease.
Nardone carries a Buy rating on WMT with a $144 price target, implying approximately 26% upside from the current trading price of $113.90.
WMT holds a Strong Buy consensus on Wall Street, supported by 26 Buys and 1 Hold across 27 analyst reviews, with an average price target of $142.46.
Ford Motor (NYSE: F) rounds out BofA’s top three picks, with analyst Alexander Perry citing a range of structural tailwinds that he believes are not yet fully reflected in the stock’s valuation.
Ford’s F-Series trucks sold 357,801 units in the first half of 2026, maintaining their status as the best-selling trucks in the U.S. market despite a 10% year-over-year decline in total company sales during the second quarter.
The company’s cloud-based fleet management platform, Ford Pro Intelligence, grew 20% year-over-year in the first half of 2026 to surpass 900,000 active subscriptions, underscoring momentum in its high-margin software and services segment.
Ford’s first-quarter results beat expectations on both lines, with automotive revenue of $39.82 billion coming in nearly $1 billion ahead of estimates and non-GAAP EPS of $0.66 beating consensus by $0.47.
Perry cited Ford’s favorable positioning in North America, a supportive regulatory environment, mix benefits from higher-margin vehicle trims, and the scaling of a new EV platform as additional reasons for confidence.
“We expect continued upward estimate revisions for Ford,” Perry stated, pointing specifically to the absence of Chinese EV disruption in North America and outsized growth in Ford’s software and services business as key differentiators.
Perry rates Ford a Buy with a $20 price target, implying roughly 43% upside from the current trading price of $14, though the broader Wall Street consensus remains a Hold based on 13 reviews showing 2 Buys, 10 Holds, and 1 Sell.
